Will This Ratings Upgrade Help Brinker International (EAT) Stock Today?

NEW YORK (TheStreet) -- Brinker International Inc. (EAT) was upgraded to "buy" from "hold" at Wunderlich Securities on Tuesday.

The firm said it raised its rating on the company, which owns, operates, and franchises the Chili's Grill and Bar and Maggiano's Little Italy restaurant chains, based on its belief Brinker is leveraged to strong industry competition sales trends.

Wunderlich upped its price target on Brinker to $55 from $52.

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Separately, TheStreet Ratings team rates BRINKER INTL INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BRINKER INTL INC (EAT) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EAT's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $82.74 million or 21.58% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -21.67%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, BRINKER INTL INC has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: EAT Ratings Report

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